WTI Oil Climbs to One-Week High as OPEC Raises Demand

West Texas Intermediate climbed in
New York to the highest level in more than a week as OPEC raised
its demand forecast and the Group of Seven pledged to avoid
devaluing their currencies.

Futures rose 0.5 percent after the Organization of
Petroleum Exporting Countries said it will have to provide 29.8
million barrels a day in 2013, up 0.3 percent from a January
estimate. The dollar fell against the euro on the G-7 statement.
Iran reiterated readiness to allow nuclear inspectors to visit a
military site if its rights are recognized. An International
Atomic Energy Agency team will arrive tomorrow.

“OPEC’s statement that they will need to pump an
additional 100,000 barrels this year and the upcoming IAEA
inspections in Iran will be followed, but currency issues are
the main driver today,” said Bob Yawger, director of the
futures division at Mizuho Securities USA Inc. in New York.
“The G-7 announcement has pushed us into positive territory.”

Crude oil for March delivery advanced 48 cents to $97.51 a
barrel on the New York Mercantile Exchange, the highest
settlement since Feb. 1. Futures fell to $94.97 yesterday, the
least since Jan. 23. The volume of all futures traded was 28
percent above with the 100-day average at 4:35 p.m.

Prices edged higher after the industry-funded American
Petroleum Institute reported crude inventories declined 2.31
million barrels last week to 369.5 million, the first decrease
this year. Oil was up 53 cents, or 0.6 percent, at $97.56 at
4:32 p.m. in electronic trading. The contract traded at $97.41
before the report was released.

Brent Futures

Brent oil for March settlement, which expires tomorrow,
gained 53 cents, or 0.4 percent, to end the session at $118.66 a
barrel on the London-based ICE Futures Europe exchange. The
more-active April contract rose 54 cents, or 0.5 percent, to
settle at $117.75 a barrel. The volume of all futures traded was
15 percent above the 100-day average.

The European benchmark grade’s premium to WTI widened to
$21.15 from $21.10 at the close of trading yesterday. The spread
settled at $23.18 on Feb. 8, the widest since Nov. 26.

“We’ve seen good momentum in WTI since touching
yesterday’s low,” said Addison Armstrong, director of market
research at Tradition Energy in Stamford, Connecticut. “There’s
some interesting activity taking place in the WTI-Brent spread.
Traders are trying to find the equilibrium for the spread.”

Euro Strength

The euro strengthened as much as 0.5 percent to $1.3476
against the dollar as the G-7’s finance ministers and central
bank governors promised they would “not target exchange rates”
in a statement today in London. The G-7 consists of Canada,
France, Germany, Italy, Japan, the U.K. and the U.S., the
world’s major industrialized economies.

OPEC trimmed output by 21,000 barrels a day to 30.32
million in January, according to the group’s monthly market
report published today. Global oil demand will rise by 800,000
barrels a day to 89.7 million, the report showed. That marks an
increase of 80,000 barrels a day from last month’s report.

Iran said it’s ready to let nuclear inspectors visit
Parchin if its right to enrich uranium is acknowledged by world
powers.

“We are prepared to come to a comprehensive agreement”
with the IAEA in which Iran’s rights as a signatory to the
nuclear Non-Proliferation Treaty would be “fully endorsed and
recognized,” Ramin Mehmanparast, an Iranian Foreign Ministry
spokesman, told reporters in Tehran today. The deal “would
include the removal of concerns, and the visit of the Parchin
military site could be one of these agreements,” he said.

Nuclear Program

The U.S. and its allies say Iran may seek to make an atomic
bomb, while Iran says it’s pursuing a civilian program.
Sanctions aimed at stopping the country’s nuclear program have
hindered its ability to export oil.

Iran pumped 2.6 million barrels a day of crude in January,
the lowest level since February 1990, a Bloomberg survey showed.
Iran, OPEC’s biggest producer after Saudi Arabia a year ago, is
now tied with the United Arab Emirates for fifth place.

U.S. crude supplies probably rose 2.2 million barrels last
week, according to the median of 10 responses in a Bloomberg
survey conducted before an Energy Information Administration
report tomorrow. The EIA, the Energy Department’s statistical
arm, will release its data at 10:30 a.m. in Washington.

Obama’s Address

Investors are awaiting President Barack Obama’s State of
the Union speech tonight. He will propose spending on
infrastructure, clean energy and education, according to an
administration official briefed on the speech.

Only Congress can pass legislation halting automatic cuts
in domestic and defense spending, which are scheduled to go into
effect next month. A continuing resolution funding the
government expires in late March and there’s a deadline to raise
the U.S. debt ceiling two months later.

“We’ll all be paying attention to the State of the Union
address tonight,” Yawger said. “Obama’s speech may set the
tone for budget talks.”

Electronic trading volume on the Nymex was 607,328
contracts as of 4:34 p.m. It totaled 831,563 contracts
yesterday, 58 percent above the three-month average. Open
interest was 1.63 million, the most since Sept. 14.